If you happen to find a battered, exhausted oil baron slumped in a dark corner (and who doesn’t from time to time?), just whisper this one word in their ear to revive them:

“Permian.”

This shale basin, which stretches across northwestern Texas and into a portion of New Mexico, is rapidly becoming a Narnia-like place for the exploration and production sector. There, profits can still be made and growth can be had. For an industry savaged by job losses and bankruptcies, that sort of escapism is a good thing. Until, of course, it becomes a bad thing.

Blackstone is offering the latest affirmation of the Permian’s attractions where it counts: money. The private equity firm is deploying more than $1 billion in partnerships to buy up land in this shale sweet spot. Earlier in the week, PDC Energy paid $1.5 billion for two E&P companies with Permian acreage. More money has changed hands buying and selling Permian assets this year than in the all the other major U.S. shale basins combined.

U.S. oil output has fallen by roughly 1.1 million barrels a day since the last peak in April 2015, according to official estimates. Yet the Permian is the last man standing.

It isn’t that oil companies have simply ignored the dismal numbers on the Nymex: The rig count in the Permian has fallen by roughly half since spring of last year, according Rystad Energy data. But the other two basins have fared even worse, down about 80 percent. And higher productivity has cut the number of new wells needed to keep Permian production flat.

“More from less” is what Narnia looks like to cash-strapped E&P companies; hence the desire of many to establish or expand positions in the Permian.
...

The Permian has had its ups and downs during recent years. Before the shale boom, the economy in the region seemed to be in the doldrums and housing was cheap and hard to sell. Then during the boom, it was hard to find and expensive and companies were building motels as fast as they could and RV parks were full. Fast food places were busy and found it hard to hire workers who could make more in the oil fields.

What is happening now is that producing oil in the Permian cost less than in any other field in the US. That has brounght in some of the major oil companies and the big investors.

Comments

Post a Comment

Popular posts from this blog

The Hill:
Democrats are more fearful about what 2018 holds than Republicans, according to a poll released early Monday.

The new Axios survey showed 55 percent of Democrats are more hopeful personally about the new year while 44 percent are more fearful.

Among Republicans, 90 percent are more hopeful about 2018, and just 9 percent are more fearful.

When asked about the world in general, 29 percent of Democrats said they are more hopeful, compared to 70 percent who said they are more fearful.

Pollsters found 67 percent of Republicans are more hopeful about the world in general in the new year, and 32 percent are more fearful....
While this may just reflect Democrats' anxiety about being out of power, the poll also demonstrates a sense of optimism by Republicans. Except for a few of the never Trumpers, most Republicans have been pleasantly surprised by the accomplishments Trump has put in place in his first year in office. I think that is because Republicans are getting better at filte…

Washington Examiner:
President Obama used his executive powers to attack industries to lower the value of certain companies, allowing his friends in the private sector to swoop in and buy them up at reduced prices, according to Peter Schweizer’s new book Secret Empires: How Our Politicians Hide Corruption and Enrich Their Families and Friends.

The book, released Tuesday, said Obama and his administration would deem industries either destructive to the environment or exploitative for the financial and professional gain of his friends, including industries such as coal mining, offshore drilling, cash advance companies, and for-profit colleges.

The book highlighted Marty Nesbitt and Harreld Kirkpatrick III, both former basketball players and close friends of the Obamas, who launched their private equity investment firm Vistria in sync with Obama’s re-election in 2012.

Reuters/Chicago Tribune:Illinois' financial condition continued to deteriorate in fiscal 2011, leaving it the state with the lowest level of net assets in the country, as its liabilities, including money owed for public pensions, grew, according to a report released on Thursday by the state's auditor general.

Illinois' $43.8 billion deficit in terms of net assets at the end of June 2011 rose from $37.5 billion in fiscal 2010, when it also ranked the lowest among states.

In fiscal 2011, New Jersey's equivalent deficit in terms of net assets was $33.4 billion, while Massachusetts' was $22.8 billion and Connecticut's $14 billion, according to the report.

California, which shares low credit ratings with Illinois, had a $10.5 billion deficit at the end of fiscal 2011. All of the other states included in the report had positive net assets, with Texas at the top with $97.3 billion....
All states with negative net assets are blue states, although New Jersey now has a Rep…